Power-Elite Protectionism

This article is excerpted from An Austrian Perspective on the History of Economic Thought, vol. 1, Economic Thought Before Adam Smith. An MP3 audio file of this article, read by Jeff Riggenbach, is available for download.

It was in the 16th century that England began its meteoric rise to the top of the economic and industrial heap. The English Crown in effect tried its best to hobble this development by mercantilist laws and regulations but was thwarted because, for various reasons, the interventionist edicts proved unenforceable.

Raw wool had for several centuries been England’s most important product, and hence its most important export. Wool was shipped largely to Flanders and to Florence to be made into fine cloth. By the early 14th century, the flourishing wool trade had reached a height of an average annual export of 35,000 sacks. The state naturally then entered the picture, taxing, regulating, and restricting.

The principal fiscal weapon to build the nation-state in England was the “poundage,” a tax on the export of wool and a tariff on the import of woolen cloth. The poundage kept increasing to pay for continuing wars. In the 1340s, King Edward III granted the monopoly of wool exporting to small groups of merchants, in return for their agreeing to collect the wool taxes on the king’s behalf. This monopoly grant served to put out of business Italian and other foreign merchants who had predominated in the wool export trade.